Solution for QID #91862: An economy is described by the following equations: C = 2 | StudyHelpMe

An economy is described by the following equations: C = 2,600 + 0.8(Y-T) - 10,000r I P = 2,000 - 10,000r G = 1,800 NX = 0 T = 3,000 The equilibrium real interest rate, expressed as a decimal, is 0.10 (that is, 10%). a) Find an expression relating planned aggregate expenditure to output. b) Solve for short-run equilibrium output (you may use a table as in the textbook or simply apply the algebraic method we went through in class). c) Show your result graphically using the Keynesian Cross diagram. d) [Harder] Assume that full employment output Y* = 12,000. Show that when the economy is at full employment output, the equilibrium real interest rate also sets national savings equal to planned investment. (Hint -How do we define national savings?).